Economy added 27,700 jobs in May, unemployment rate hit record low at 5.4%: StatCan [UPDATED]
Economists on average had expected the addition of 8,000 jobs for the month
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OTTAWA—The Canadian economy showed signs of strength in May as it added 27,700 jobs and the unemployment rate fell to its lowest level since comparable data become available in 1976.
Statistics Canada said Friday the unemployment rate fell to 5.4%, compared with 5.7% in April as the number of people looking for work fell sharply.
Economists on average had expected the addition of 8,000 jobs for the month and an unemployment rate of 5.7%, according to Thomson Reuters Eikon.
The better-than-expected increase in the number of jobs—made up entirely of full-time employment as there was no change in the number of part-time jobs—followed a record 106,500 jobs that were added in April.
However CIBC senior economist Royce Mendes noted that when you drill down into the details of the jobs report some of the details weren’t as good as the headline suggested.
“The details though weren’t immaculate, if you look at where the job creation was focused,” he said.
“Yes, it was focused in full-time which is solid for the Canadian economy, but it was also attributed to self-employment, which tends to be more precarious than paid employment at companies.”
The number of self-employed workers rose 61,500, while the number of employees fell by 33,800 including a drop of 13,100 public sector employees and 20,700 private sector employees.
Mendes also noted that hours worked were down for the month.
“So despite having a healthy increase in headline employment, hours worked, which actually translates more directly to GDP, were actually down,” he said.
The jobs report was the latest data point to suggest the economic weakness seen over the winter is on the mend.
On Thursday, Statistics Canada reported the smallest merchandise trade deficit since last October, helped by a rise in exports.
The Canadian economy posted its weakest back-to-back quarters of growth since 2015 in the fourth quarter of 2018 and the first quarter of this year.
However, the Bank of Canada has said that it expected the weakness to be temporary and that the economy would pick up pace throughout the rest of this year.
TD Bank senior economist Brian DePratto said the jobs report will serve to reinforce the Bank of Canada’s cautious approach.
“Recent communication attributed weakness in hours worked to caution among employers. That caution clearly remains, and with trade uncertainty elevated, expect the Bank of Canada to stay on the sidelines for some time,” DePratto wrote in a note to clients.
Mendes noted that he’ll be looking to upcoming data on wholesale and retail sales as well as the next read on manufacturing in Canada for signs of how the economy is faring.
“Those will provide a clearer indication whether the strong hand off from the first quarter—where we saw monthly GDP in March really post a strong reading—continued into the second quarter in April,” he said.
“That will be the next hurdle for the Canadian economy to really show that some of the weakness that we’ve seen recently is in the past now.”
The jobs report Friday found the goods-producing sector of the economy added 4,900 jobs, while the services sector added 22,800.
The health care and social assistance industry added 20,400 jobs in the month, while professional, scientific and technical services increased by 17,200.
Business, building and support services lost 19,400 jobs and employment in accommodation and food services fell 12,000.
Regionally, Ontario added 20,900 jobs in May, while B.C. saw the number of jobs rise by 16,800. Newfoundland and Labrador lost 2,700 jobs for the month.
Year-over-year average hourly wage growth for all employees, a key indicator monitored by the Bank of Canada ahead of its interest-rate decisions, was 2.8% in May, up from 2.5% in April.
Compared with May 2018, the Canadian economy added 453,100 jobs including 299,000 full-time positions and 154,100 part-time jobs.